Maruti Suzuki India Ltd is exploring the possibility of entering the vehicle leasing business for its retail customers, said two people aware of the company’s plans.
The plan has been in the works for about a year and is being spearheaded by a special projects team of the company, the people said requesting anonymity.
India’s largest car maker will follow some of its closest rivals such as Hyundai Motor India Ltd and Mahindra and Mahindra Ltd (M&M), who already offer their vehicles on lease. Maruti’s vehicle leasing model would, however, vary from the others considering it plans to tap its large countrywide dealership network for the business expansion.
This strategy would open up an additional revenue stream for Maruti dealers at a time when domestic automobile sales are forecast to slump this year due to the covid-19-induced economic crisis, the two people cited above said.
An email sent to Maruti Suzuki on Tuesday remained unanswered.
Carmakers generally tend to partner startups such as Revv and Zoomcar for offering their vehicles on lease to retail customers. Some such as Mercedes-Benz India and BMW India also have their own customized leasing plans for individual customers.
Such vehicle leasing services are popular in developed markets such as the US and Europe, while in India, automakers have started this service for the past about two years.
Maruti has previously ventured into the vehicle leasing space for corporates but without any major success.
The situation might be conducive for Maruti to launch such services since urban customers are likely to prefer the vehicle leasing model, given declining affordability and less hassle of leased vehicles, one of the two people cited above said.
“It’s still not clear when this will be launched, but the projects team has been working on this. Maruti has been giving its cars to Zoomcar and other platforms, but if they plan to go through the dealers, then it will help dealers as well as the company," the person said.
Others such as Hyundai and Mahindra are already present in this segment through tie-ups with vehicle leasing startups. In 2018, Hyundai also made an undisclosed investment in Revv, while Mumbai-based M&M invested around ₹176 crore in Zoomcar.
Maruti’s plans to foray into retail vehicle leasing is a well thought out strategy as some consumers don’t want the hassle of owning cars, said Puneet Gupta, associate director, vehicle forecasting, IHS Markit. So, leasing appears to be an excellent alternative to buying a car, he said.
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